ch 13: employee benefits and services Flashcards
1
Q
describe employee benefits
A
- indirect financial payments that an employee receives during employment
- employee services are growing in importance as part of the total compensation
- benefits matter to employees
- benefits aligned with business strategy help attract and retain the right people to achieve business objectives
- benefits administration is an increasingly specialized task
- benefits must comply with a wide variety of laws in Canada
2
Q
what are thr 5 govenrment-mandated benefits?
A
- employee insurance (EI)
- Canada/Quebec Pension Plans (C/QPP)
- workers’ compensation
- paid time off
- pay on termination of employment
3
Q
what is employment insurance (EI)?
A
- federal program intended to provide temporary financial assistance to eligible persons who experience interruption to their work through no fault of their own.
- funded by contributions from employees and employers
- EI is perceived to be a benefit since it provides employees who are laid off, terminated without just cause, or who quit their job for a justifiable reason (such as harassment) with an alternative form of government income until they secure employment
4
Q
how does someone qualify for EI?
A
- an employee must first have worked a minimum number of hours during a minimum number of weeks, called a qualifying period (the number of hours and weeks varies among regions of the country)
- there is a waiting period from the last day of work until benefits begin. The length of the waiting period varies, but it is usually two weeks.
- If the employee was provided with severance pay or holiday pay at the time of losing the job, these payments must run out before the waiting period begins
5
Q
describe Canada/Quebec pension plans (C/QPP) and the different types
A
- provides working Canadians with a basic level of financial security on retirement
- types of benefits:
- retirement pensions
- disability benefits
- survivor benefits
- Benefits are payable only to those individuals who make contributions to the plans or to their family members.
6
Q
describe the retirement pension
A
- 25 percent of the average earnings (adjusted for inflation up to the average inflation level during the last five years before retirement) over the years during which contributions were made
- can choose to begin receiving benefits at any time between the ages of 60 and 70
- Benefits are reduced on early retirement before a predetermined age (usually 65) and are increased in the case of late retirement.
7
Q
describe disability benefits
A
- only paid for severe disabilities that are expected to be permanent or to last for an extended period
- 75 percent of the pension benefit earned at the date of disability, plus a flat-rate amount per child
8
Q
describe survivor benefits
A
- paid on the death of a plan member
- A lump-sum payment is made to the plan member’s estate, and a monthly pension is also payable to the surviving spouse and each dependent child
9
Q
describe workers’ compensation
A
- provides sure and prompt income and medical benefits to victims of work-related accidents or illnesses, regardless of fault
- benefits are non-taxable
- controlling costs:
- focus on accident prevention, safety, and health programs
- rehabilitation and modified return to work programs
- workers are required to co-operate with initiatives
- Every province and territory and the federal jurisdiction has its own workers’ compensation law
10
Q
describe controlling workers’ compensation costs
A
- Although workers’ compensation boards pay the claims, the premiums for most employers depend on the number and dollar value of claims that are paid.
- two basic approaches to reducing workers’ compensation claims:
- firms try to reduce accident-or illness-causing conditions in facilities by instituting effective safety and health programs
- employers have become involved in instituting rehabilitation programs for injured or ill employees
11
Q
what are the different types of paid time off?
A
- maternity/paternity leave
- vacations
- legislated holidays
- paid breaks
12
Q
describe maternity/paternity paid time off
A
- up to 68 weeks
- guaranteed of old or similar job on return to work
- The amount of maternity leave is 17 or 18 weeks in each jurisdiction (15 weeks in Alberta), but parental and adoption leaves range from 34 to 52 weeks
- guaranteed their old jobs or similar jobs when they return to work
- can be taken by one parent or split between both parents
- Some employers provide full or partial pay for all or part of legally required unpaid leaves by “topping up” what employees receive from EI
13
Q
describe vacations paid time off
A
- labour/employment standards legislation sets out the minimum amount of paid vacation that must be provided to employees
- More firms are taking a more flexible vacation leave approach
- Vacation policy decisions include:
- Are employees paid for accrued vacation time if they quit before taking their vacations?
- Are employees paid for a holiday if they don’t come to work the day before and the day after the holiday?
- should employers pay some premium—such as time and a half—when employees must work on holidays?
14
Q
describe legislated holidays paid time off
A
- number of paid holidays varies from one jurisdiction to another from a minimum of five to a maximum of nine
- Additional holidays may be observed in each province
15
Q
describe paid breaks for paid time off
A
- mandated paid and unpaid time off requirements within a work day at the provincial, territorial, or federal level.
- some jobs (shift work) required an uninterrupted break after a set number of hours
- if employee is under direct control of employer and expected to be available for work during this time, the break must be paid
- otherwise, it is unpaid (coffee and eating breaks)
16
Q
describe pay on termination of employement paid time off
A
- employment/labour standards legislation requires that when employment is being terminated by the employer, the employee must be provided by termination pay
- requirements:
- reasonable advance notice periods
- advanced notice for mass layoffs
- severance pay
17
Q
describe reasonable advance notice for pay on termination of employment
A
- provide employee in advance with a written notice
- advance (reasonable) notice applies only to employees whose employment is terminated through no clause of their own
- alternative is pay in lieu of reasonable notice and employee ceases to work immediately
18
Q
what is advance/reasonable notice?
A
Advance written notice required if the employer is going to terminate employment of a worker without cause
19
Q
what is pay in lieu of reasonable notice?
A
Advance written notice required if the employer is going to terminate employment of a worker without cause
20
Q
describe advance notice for mass layoffs for pay on termination of employment
A
- some provinces require additional pay when the layoff of more than 50 employees occurs
- BC, Manitoba, Ontario, New Brunswick, Newfoundland, and Labrador
- The rationale behind this regulation is that larger layoffs result in longer time to re-employment, so in cases of larger layoffs, the employees are given longer reasonable notice period
21
Q
describe severance pay for pay on termination of employment
A
- an additional payout on top of the minimum notice period requirements
- only applies in certain specific conditions in the applicable jurisdictions
- Employees only in Ontario and the federal jurisdiction may be eligible for severance pay in addition to pay in lieu of notice in certain termination situations
- The amount of the severance pay is one week’s pay for each year of employment (maximum 26 weeks)
22
Q
what are the different voluntary employer-sponsered benefits?
A
- life insurance
- supplementary healthcare/medical insurance
- short-term disability plans and sick leave plans
- long-term disability plans
- mental health benefits
23
Q
describe life insurance
A
- almost all employees provide group life insurance plans
- accidental death and dismemberment coverage:
- provides a fixed lump-sum
- critical illness insurance
- lump-sum payment for a life-threatening illness
24
Q
what is group life insurance?
A
Life insurance is provided at lower rates for all employees, including new employees, regardless of health or physical condition
25
what is accidental death and dismemberment coverage?
Employer-paid benefit that provides a fixed lump-sum benefit in addition to life insurance benefits when death is accidental or a range of benefits in case of accidental loss of limbs or sight
26
what is critical illness insurance?
The benefit that provides a lump-sum benefit to an employee who is diagnosed with and survives a life-threatening illness.
27
describe supplementary healthcare/medical insurance
* most employers provide plans that cover medical expenses not covered by government health plans
* Supplementary healthcare insurance is aimed at providing protection against medical costs arising from off-the-job accidents or illness
* Supplementary health-care plans provide major medical coverage to meet medical expenses not covered by government healthcare plans
* In most employer-sponsored drug plans, employees must pay a specified amount of deductible expense (typically $25 or $50) per year before plan benefits begin
28
what is a deductible?
The annual amount of health/ dental expenses that an employee must pay before insurance benefits will be paid.
29
describe short-term disability plans and sick leave plans
* continue all or part of salary or illness or injury-related absence from work
* plans typically provide full pay for some period (often two or three weeks) and then gradually reduce the percentage of earnings paid as the period of absence lengthens
* **Sick leave** provides pay to employees when they’re out of work due to illness
* many employers use “pooled” paid leave plans which combine **sick leave**, **vacation**, and **personal** days.
30
describe long-term disability plans
* insurance that provides income protection or compensation for long-term illness or injury that is not work-related
* these start when sick leave and/or short-term disability is used up
* disability management program:
* prevention, early assessment, and intervention, early and safe return-to-work policies, etc.
* The disability benefits usually range from 50 to 75 percent of the employee’s base pay
31
what is disability management?
A proactive, employer-centered process that coordinates the activities of the employer, the insurance company, and healthcare providers in an effort to minimize the impact of injury, disability, or disease on a worker’s capacity to successfully perform his or her job
32
describe mental health benefits
* leading cause of short and long-term disability claims
* Psychiatric disabilities are the fastest growing of all occupational dis-abilities, with depression being the most common
* Only one-third of employers have implemented return-to-work programs specific to mental health
33
describe retirement benefits
* pre-funded employer-sponsored pension plans are intended to supplement an employee's government-sponsored retirement benefits
* income is provided when an employee reaches a pre-determined retirement age
* categories of pension plans:
* defined benefit plan
* defined contribution plan
* group registered retirement savings plan (RRSP)
* deferred profit-sharing plan (DPSP)
34
what is a pension plan?
Plans that provide income when employees reach a pre-determined retirement age
* Unlike government-provided retirement benefits, employer-sponsored pension plans are pre-funded
35
describe defined benefit pension plans
* actual benefits are defined ahead of time
* A plan that contains a formula for determining retirement benefits, so that the actual benefits to be received are defined ahead of time
36
describe **defined contribution** pension plans
* benefits depend on the amounts employees (and employers) contribute to the plan, and the fund's investment earning
* A plan that does not specify the eventual benefit amount, only the employees periodic contribution to the retirement fund is specified.
* 2 types of defined contribution arrangements
* group registered retirement savings plan (group RRSP)
* deferred profit-sharing plan (DPSP)
37
what are **group registered retirement savings plans** (RRSP)?
* employees contribute directly from pay which is matched by the employer
* A plan in which employees can have a portion of the compensation put into an RRSP by the employer, and the employee is not taxed on match until they retire or remove money from the plan.
38
what is a **deferred profit-sharing plan** (DPSP)?
* certain amount of company profits are credited to employee's account
* payable at retirement, termination, or death
* no tax is paid until the money is received from the plans at the time of the employee’s death or termination of employment
39
what are the legal and policy issues to consider when designing a pension plan?
* **membership** requirements - minimum number of years of service
* **benefit** formula - final or average earning
* retirement age - mandatory retirement age is prohibited under human rights legislation
* **funding**- contributions by employer, employee, or both
* **vesting** - provision that employer money put into pension fund cannot be forfeited for any reason
* **portability** - if employee leaves the pension can be transferred
40
wahat is portability?
A provision that employees who change jobs can transfer the lump-sum value of the pension they have earned to a locked-in RRSP or their new employer’s pension plan
41
what is phased retirement?
An arrangement whereby employees gradually ease into retirement by using reduced workdays or shortened work weeks
* Constraints under the Income Tax Act and pension legislation in some jurisdictions are slowly being loosened, and it is now possible for older workers to receive some benefits from their pension plan while they are being paid to continue to work.
42
what are supplemental employee retirement plans (SERPs)?
* additional pension benefits for employees whose full pension exceeds maximum allowable under the Income Tax Act
43
list some employee-specific services
* family-friendly benefit
* eldercare
* flexible work schedules
* vountry job-related services
* personal services
* executive perquisites
44
describe family-friendly benefits
* subsidized childcare = **company** sponsored facilities or **local community** childcare facilities
* help attract young parents to the payroll, reduce absenteenism and turnover, increases **job satisfaction and productivity**
* intended to reduce the extent to which work–family conflicts spill over into the employee’s job
45
describe eldercare
* increasingly important workplace issue
* employers are establishing support initiatives
* flextime, compassionate care leave, education, free pagers, and adult daycare programs
* Company eldercare programs are designed to assist employees who must help elderly parents or relatives who are not fully able to care for themselves, up to and including palliative care of the dying
46
what is flextime?
A work schedule in which employees’ workdays are built around a core of midday hours and employees determine, within limits, what other hours they will work
47
what comprises of flexible work schedules?
* flextime
* telecommuting
* compressed work week
* job sharing
* work sharing
48
what is flextime?
* workdays are built around a core of midday hours, employees determine what other hours they work
* they can start and end at different times, but have to be there for the core working hours
49
what is telecommuting?
* using technology to work away from the office
50
what is a compressed work week?
* work fewer days each week, but longer hours each day
51
what is job sharing?
* 2 people share a single full-time job
* can be particularly useful for retirement-aged employees
52
what is work sharing?
* temporary reduction in work hours during economic downturns to prevent layoffs
53
what are some voluntary job-related services?
* education subsidies - upgrade educational qualificaions, job related or not
* paid time off for volunteering - help brand the company
* transportation - carpooling, public transit subsidies
* food services - full service cafeterias on-site, or subsidies
* sabbaticals - leaves of absence to pursue personal goals. usually unpaid
54
what are some personal services?
* credit unions
* counselling services
* **employee assistance** plans (EAPs)
* other personal services
55
what are credit unions?
* seperate business established with assistance of employer
* usually become members of a credit union by purchas-ing a share of the credit union’s stock for $5 or $10.
56
describe counselling services
* **financial, family, career, job placement, pre-retirement, and legal**
57
what are employee assistance plans (EAPs)?
* company sponsored to help employees cope with personal problems
* confidential, **in-house**, or with an **external** provider
* A company-sponsored program to help employees cope with personal problems that are interfering with or have the potential to interfere with their job performance, as well as issues affecting their well-being or the well-being of their families
58
what are some other personal services?
* various social and recreational opportunities
* on-site gyms
59
what can executive perquisites (perks) include?
* can range from substantial to the almost insignificant
* salary guarantees
* relocation benefits
* outplace assistance
* company care/planes
* executive dining rooms
* legal services
* liberal expense accounts
* club memberships
* education for dependents
60
describe flexible benefits programs and the benefits to the employer and employees
* individualized plans to accomodate employee preferances
* benefits to employers:
* cost containment - place limits on costs
* ability to meet needs of a diverse workforce
* benefits to employees:
* put together own benefits package subject to 2 constraits
* the employer must carefully limit total cost for each total benefits package
* each benefit plan must include certain items that are not optional
* main advantage is flexibility
61
describe benefits administration
* challenge for all firms
* keep track of benefits status of each employee is time-consuming
* Many companies make use of some sort of benefits spreadsheet software to facilitate tracking benefits and updating information
* can also outsource
62
describe benefits fraud
* audit online benefit claims forms
* monitor all claims
* sick days are often abused
63
what is coinsurance?
The percentage of expenses (in excess of the deductible) that are paid for by the insurance plan
64
describe ways in reducing health-benefit costs
* increased costs are the biggest issue facing firms
* **aging** population
* increased use of **expensive new drugs**
* reducing costs
* increase **coinsurance** paid by employees
* publish list of **drugs restricted** under the plan
* increase health **promotions** in-house
* implement **risk**-assessment programs
* establish healthcare **spending** accounts
65
describe retiree health benefits
* costs are exceeding the costs for active employees
* cut costs by increasing retiree contributions
* increase deductibles
* tighten eligibility requirements
* reduce maximum payouts
* trend is away from employer-provided retiree health benefits
